No description available.

No description available.

This thesis is concerned with various aspects of transitional labour reallocation either between different labour market states, or between less and more efficient enterprises, or between formal and informal sectors. The possibility of irregular employment opportunities receives special attention in this work. The substantive material is arranged in three independent essays. The first, empirical study portrays the most important trends in labour reallocation in Russia, and presents analyses of two types. First, transition probabilities are studied, and some determinants of worker flows are identified using a multinomial logit modelling. Second, a survival analysis of the non-employed is conducted to reveal possible causes of growing stagnancy of unemployment and inactivity. The findings are contrasted with the stylised theory of labour reallocation in transition (Aghion and Blanchard, 1994). The directions in which theoretical modifications should be attempted in future research are suggested. The second and the third essays draw upon some of these suggestions and are aimed at making a contribution on the theoretical front. The second essay puts forward a development of the seminal model of transition from planned to market economy by Aghion and Blanchard (1994). We introduce an informal sector to show that its presence can generate the dynamics qualitatively different from the types considered in the previous literature on the topic. It is argued that convergence to qualitatively different steady states can help explain varying transitional experiences of East European countries and the former Soviet Union republics. Attention is drawn to policy implications of the model, in particular to the creation of conditions favourable for the development of the new private sector as opposed to informal private initiative. Finally, the third essay takes the issue of coexistence of formal and informal sectors in transition further to see if such duality is possible in the long run, and to discuss the role of the government in creating preconditions for it. The study draws on the standard framework of Pissarides (2000) of search in the labour market. It demonstrates that a long-run equilibrium with both formal and informal economies is possible under very mild assumptions. It is also shown that labour market imperfections can create a situation when reduction in informality may be detrimental to economic welfare. Although the foci of the essays differ, the issues raised therein are closely knit so that many threads can be drawn together. In the concluding chapter we discuss the main areas to which this thesis contributes, summarise the main findings, and make some suggestions for future research.

Being the largest transition economy Russia has interested economists since the collapse of the USSR. This thesis contributes to the literature on Russian labour market. In the first chapter I investigate cyclicality of real wages in Russia, the second chapter looks into consequences of wage arrears for workers' future and the third chapter develops a model of wage arrears that arise as a result of firms' opportunistic behaviour. The principal source of data used in this thesis is the Russia Longitudinal Monitoring Survey (the RLMS). The first chapter investigates cyclicality of real wages in Russia. The analysis is carried out both at the country as well as regional levels and the influence of wage arrears on the cyclicality is examined. The estimated cyclicality coefficient is three to four times larger in magnitude than those observed for Germany, the UK, the USA and other developed countries. An increase in unemployment rate by one percentage point leads to an average reduction in real wages of four percent. The results are robust to changes in sample period and estimation technique. Wage arrears do not prove to be the driving force of this strong procyclicality. The second chapter investigates influence of wage arrears on the future of affected workers. Limited dependent variable models are used to analyse the effects of wage arrears on the probability of future wage arrears and frequent separation from employers. Difference-in-difference approach is used to analyse effects on earnings. The results suggest that affected workers are twice as likely to experience wage arrears again within next three years. Job-movers are able to decrease the probability of repeated wage arrears by nine percentage points. The effect on separations is more modest: affected workers are approximately forty percent more likely to change jobs the following year and eleven percent more likely to experience frequent separations within five years after wage arrears. The effect on future earnings is relatively small and short-lived. Take-home wages decrease by 1 000 RUB compared to unaffected workers and recover within the following year. Analysis of stocks and flows of wage arrears indicates that in the period from 1998 to 2012 on average three quarters of wage debts were repaid. The third chapter picks up the discussion of the nature of wage arrears in Russia. An indirect evidence suggests that sometimes the firms choose to withhold wages despite having the resources to pay and in certain circumstances the employees accept it. The chapter presents a model of wage arrears that is based on worker-firm interactions. Calibration to the Russian data indicates that the parameter values observed in the RLMS dataset are consistent with a stable equilibrium in which an approximately half of the labour force experience late payments. The model predicts average duration of wage arrears of four months. This prediction is consistent with the Russian reality in the late 1990s.